Malls Making a Comeback!!!
Well, a 0.1% comeback. But hey! Anything suggesting that the next generation(s) might enjoy malls the way I have is music to my ears. According to this article on CNNMoney.com, malls increased their market share of consumer dollars from 2.4% to 2.5% last year. This is a far cry from the alternating stagnation and contraction they’ve experienced in recent years.
The article attributes this success to several factors: first, mall leasing agencies are becoming more creative. For instance, more and more malls are leasing space to Target discount stores. In some areas of the country this has been a common practice for over two decades, but now malls across the country are cashing in on the stability and wide customer base offered by Target anchors.
Also, mall leasing agencies are diversifying the properties inside their malls- the article lists movie theatres, gyms, and hotels. All of these increase the image and drawing power of shopping malls.
Metals Go Boom
The Economist has an interesting report about massive profits logged by the world’s major mining companies. In particular, they cite the success of Rio Tinto, the British-Australian mining giant. In 2010 Rio Tinto saw $14.3 billion in profits. The Economist credits this profit mainly to a rise in demand for iron ore, and that’s where the article gets really interesting.
See, the worldwide demand for iron ore is still growing. Countries like China and India are developing their urban centers at a tremendous rate, and that means more demand for metals in their buildings and transportation infrastructure. In addition to that, richer nations are recovering form the recession and starting to build again. Worldwide, demand for metals is expected to double in the next 20 years!
This is awesome news for an urban junkie like myself, although of course it raises concerns about population centralization and its affects on culture, food production, the environment, etc. I hinted at some of those centralization concerns in a post last week.
Best Buy in China
Remember folks, I’m a retail junkie at heart! I could never pass up a story like this.
Check out this fantastic CNNMoney.com article about Best Buy’s adventures in adapting to Chinese consumer culture. According to the article, Chinese consumers enjoy shopping for technology products in a somewhat chaotic, cluttered atmosphere. They are also described as being “extremely price conscious” and having “strong local preferences”.
This article left me with one interesting question: How does Best Buy (or rather their China-local “Five Star Appliance Company” brand) reconcile the inefficiencies of the Chinese “PC mall” model with a commitment to low prices? Doesn’t the westernized “curated” approach lead to lower prices? The article hints at special “concessions” to manufacturers that make the system feasible. Perhaps I’ll dig further into this in the future!
Australian Consumer Economy in Trouble
Another recently-strong economy is headed in the wrong direction: according to this MarketWatch article, Australia’s consumer spending increased only 0.2% in December, down from 0.4% in November. Analysts had expected an 0.5% increase, so the 0.2% was a nasty shock.
Now, no one can blame Australians for staying home and generally being stingy with their dollars. Back-to-back natural disasters (flooding followed by a cyclone) have wreaked havoc on portions of the country. This affects not only the directly afflicted areas but the overall mood of the entire continent.
Myer Holdings, Australia’s biggest department store operator, has been hit particularly hard. In addition to weather challenges, a stronger Australian dollar encourages their customer base to import goods instead of purchasing at local stores. Still, the company has some tricks up its sleeve: they recently acquired a 65% stake in popular Australian women’s fashion brand Sass & Bide.
Rural Air Subsidies
Most boring article title ever? Perhaps. However, the upcoming referendum on government subsidies to rural airports has potential to impact America’s development.
This story has been all over the news this morning, but I took this Associated Press article as my main source. In a nutshell, the U.S. government provides financial assistance to airports in small communities. These subsidies are paid to airlines to make the smaller airports profitable. Without the assistance, it is assumed that airlines would stop serving the smaller rural communities. The program costs about $200 million annually, and some senators now advocate cutting it as part of the general budget tightening push.
So what is the value of airline service to small communities? What does air travel offer that buses, railways, and commuter vehicles do not? It really boils down to business. The ability to be in New York City (or Chicago, or Detroit, etc) this afternoon is vital for many developing and established firms. Without that ability, many businesses will never get off the ground (sorry for the pun) and existing businesses may be forced to move to cities or close up. Removing these subsidies would accelerrate the decline of rural America.
As a pragmatist; I ask the question: do we need rural communities? What are the drawbacks of an exclusively urban-centered population? These are extremely interesting (and now even more relevant) questions which I will explore in future posts.
Borders in Trouble
Woah, I just plain forgot to post yesterday- UNACCEPTABLE. To atone I will post two (count ‘em) times today. As per usual, I’ll start off with some bad news.
According to this CNNMoney.com article, national book retailer Borders saw their stock plummet 35% during trading yesterday (and another 17% after hours). This was on a report that their long-rumored bankruptcy might happen next week.
Borders is losing out to Barnes and Noble for a number of reasons. For one, they have fewer locations nationwide which hinders their visibility. My own town of Des Moines Iowa has 2 Barnes and Noble locations: one is located in our best mall and the other is a grand freestanding two-story building in an upscale shopping plaza. We have one Borders sandwiched in a somewhat lower-class strip mall.
From my perspective, the #1 reason that Borders loses out is its long-term viability. E-books are the undeniable future of book publishing. Their e-Reader initiative is not nearly as defined or high-profile as Barnes and Noble. B&N’s Nook is easily a top-two technology. Sitting here, I can’t even name Borders’s answer e-reader. A quick look at their website shows that they do not have a standard Borders-branded e-reader. That’s a problem!
A Pat on the Back
Shall we start the “Daily Biz Mojo” train? One of my earliest posts was a news summary on Rare Earth Minerals and now this article over at investopedia.com lists REMs as the number one investment trend for 2011! So apparently The Daily Biz is a kingmaker. So without further ado, let me do some articles on downtown Des Moines, the upcoming Dark Tower films, and my bank account. Let’s work some MAGIC!
The “New”
The New Economy. The New Frugality. The New Normal. Fallout from the recent Great Recession is intense and it has lasted a long time now. Worker production is up, incomes are flat (at best) and everyone is still on pins and needles. Government seems at a loss about how to proceed, and the unemployment rate won’t budge. Many pundits, economists, and even elected officials suggest that we could be entering into a new way of life that is fundamentally different from the boom times of the 90s and early 2000s. Here are a couple of recent perspectives on “new”:
One of the books that got me interested in personal finance and business in general was “The New Frugality” by Chris Farrell. He takes a hard line that America’s hyper-consuming ways have changed and will stay changed for the foreseeable future. He lays out strategies and perspectives on saving, spending, and meeting the demands of the “new” economy. It is definitely worth a read.
On the other hand, pundits like Catherine Rampell warn against such definitive statements. In this recent blog post she presents a historical perspective on “new” thinking. She points out that economists have predicted fundamental shifts in American economic timbre before, but old habits always return to the fore. She concedes that conditions are likely to stay dire for a few years, but get this: bear with me now… take a deep breath… repeat after me… a few years is not forever.
Wow- That’s a Lot of Money
Hedge fund manager John Paulson made over $5 billion during 2010- that comes out to $158.55 per second. According to this CNNMoney article by focusing on gold-focused funds because he sensed the weakness of currencies worldwide. Because I love my readers I did some math: here is what he would have made if he’d gone to see some of my favorite Oscar-nominated films “on the clock”:
The Fighter - $1,093,995.00
Black Swan - $1,027,404.00
The King’s Speech - $1,122,534.00
Thus concludes your cinema / rich person lesson for the day!
Retail Concepts: Retail Squared
Call it “Brick-and-Mortar Makes a Stand”: Large retailers are renting their space out to smaller, self-contained businesses. You know that nail salon you always see when you’re checking out at Wal-Mart? That’s one example.
Regular readers of the Daily Biz know I’m something of a “retail junkie”, so this story from CNNMoney is essentially candy for me. Sears is renting out space to Forever 21. Target is making room for Radio Shack. Discount stores, department stores, big box stores, and even grocery stores are turning into teeny tiny shopping malls and I love it!
The win-win here is a no-brainer: smaller retailers or service providers capitalize on the foot traffic from the large retail space. The larger retailers gain additional customers spilling over from the specialized smaller entities. The larger store also gains valuable differentiation: maybe Wal-Mart is closer, but you need to get a cellphone from the Radio Shack inside a Target. Or the other way around: maybe you prefer Target but you want to pick up dinner from the Subway inside Wal-Mart.
I wonder where “partnering” ends and “renting space out” begins. The article mentions the example of Kroger grocery stores carrying a special installation of Murray’s Cheese. How is that different from having a Levi’s jeans stand inside any other store? The scale? The sourcing? The interactivity? Questions for another time!
